Immigration and Customs Enforcement agents seized 10 online gambling websites, after gaming companies allegedly processed illegal payments through an undercover U.S.-based Internet business the feds propped up to ensnare the culprits.
Here's how the operation went down, federal officials announced Monday night:
In the fall of 2009, a cooperating online player who lived in Maryland created an account on the gambling site, betED.com. Federal investigators provided the individual with $500 to place bets on the gaming site. In March 2010, betED paid out the informant's winnings by wiring $100 through the underground processor, called Linwood Payment Solutions.
Allegedly, Linwood has processed gambling transactions since 2009 for betED and other gambling organizations using banks located in Guam and Charlotte, N.C., according to an affidavit unsealed on Monday. It is illegal for Internet gambling ventures to conduct business in Maryland, regardless of whether the operator is based outside the United States, said U.S. Attorney Rod J. Rosenstein.
Officials said between December 2009 and January 2011, Linwood processed payments worth more than $33 million, including those exchanged in Maryland.
The shakedown comes on the heels of federal charges against major online poker firms for allegedly duping U.S. banks into processing $3 billion worth of illicit proceeds. In that case, Justice officials ultimately halted the domestic operations of the three largest poker websites doing business stateside -- PokerStars, Full Tilt Poker and Absolute Poker.
This time, it seems the gambling operators were duped. "Linwood allowed undercover agents to gain person-to-person contact with top managers of gambling organizations to discuss the Internet gambling business, to negotiate contracts and terms of the processing and to handle the intricate movement and processing of collection and payment data from the gambling organizations to the banks," federal officials said in a statement on Monday.
As part of the investigation, the U.S. government also seized 11 bank accounts based in Charlotte, N.C.; Guam; Panama; Malta; Portugal; and the Netherlands.
Defendants in the case face a maximum of five years in prison on charges of operating an illegal gambling business and up to 20 years in prison for money laundering.
William Winter, special agent in charge of ICE Homeland Security Investigations in Baltimore, noted, "The proceeds from illegal Internet gambling are often used to fuel organized crime and support criminal activity."
Added IRS Special Agent in Charge Rebecca A. Sparkman, "Regardless of how the money changes hands - via cash, check, wire transfers or credit cards - and regardless of where the money is stored - in a United States financial institution or an offshore bank - we will trace the funds."
The implicated sites include the following:
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